Perfetti’s distribution strategy

Presented byBhakta ram Rana

Company profile

Perfetti Van melle is a Italy based parent company. World’s third largest confectionery group. It have 31 manufactory plants in world wide 130 – country Its headquarters are located Italy (Lainate) and

Netherland (Breda) 17000 Employee Net sale in 2008 $1972 million 40% chewing gum 60% candies

Its turn over is Rs. 400 crores. 5,000 distributors service. Perfetti enter to the Indian market in 1994. It has two manufacturing plants in India — at

Manesar (Haryana) and Tamil Nadu. Perfetti brands would be distributed across 6.5

lakhs outlets and the combination of right-priced products, distribution reach and fat ad spends has ensured it a 25 per cent market share.

competitorCadbury’sNutrineParryParleNestleWrigley

Products

Alpenliebe Big Babul Center Fresh Center Fruit Center Shock Chatar Patar Chlormint Cofitos Happydent white Protex Marbles Mentos

Vision & mission

Vision We will enhancement world leadership be

confectionery by creating value for people through delightful and imaginative high quality product.

missionDevelop, manufacture and market, high

quality and to provide innovative product to the consumer through efficient use of our resoueces and partnership with our customer.

FACT

1- Perfetti van Melle entered the Indian market in 1994.

2- The turnover of the company is 400 cr., and there market share is 80%.

3- They are offers to selling products at 25paise.

4- The company decided to sell the product by the small retailers.

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5- The company divided its 11 brands into 2 groups , p1 and p2.

6- P1 is doing very well but p2 is not. 7- The p2 company decided to more

advertising the products. 8- the advertising cost is 17 cr.

Analysis

I have done case analysis on these following points.

Market Analysisperfetti entered in indian market in

1994.There was 80% market share of

unorganized companies.The organized market was

dominated by perry’s, nutrine and cadbury.

Conti…………….

The foreign tag was the problem for perfetti.

In contrast to other MNC who came into the market through partnership with indian companies.

The acquisition brought a distribution network of 3 lakhs outlet into perfetti india’s fold.

Ven mell was already present in Indian market.

Increasing the outlet was difficult task for the company .

So company was start focusing penetrating deeper into specific areas.

The company felt that small retailer could provide the much required sales for the company.

There was a small hitch in the implementing this strategy

Product Analysis

The other problem for company was that some of its product were competing for the same space as the retailer received them to substitutes for each other.

It divides its 11 brand into 2 group that is P1 and P2.

The sells of P1 group were double the sell the P2.

Promotion Analysis

Cont……..

Company seemed to want to focused on to promoting of product.

Its mainly investment done in R&D and to improve its product mix and network channel.

Company felt that to heavy advertising and marketing of the product, and could pull the customers and thereby improve sell.

This thinking was reflected in company advertisement budget .

Related Analysis

By revamping the distribution network company went on to become the market leader .

The reason behind the success of perfetti was distribution strategy that its competitor adopted itself.

Cadbury and joyco also followed the similar strategy with small difference .

Question 1

Analyze the distribution strategy of Perfetti, which enable it to become a leading player in the indian confectionary market.

Ans.-  Perfetti has created a multi-tiered distribution system.

Product range is divided into 2 categories, which in turn have different distributors. It divided its 11 brands into two groups — P1 and P2. Non-conflicting brands like Alpenliebe original, Chlormint, Big Babol and Centerfresh were grouped under P1.

CenterShock, Chlormint gum, Mentos, Marbels, Fruit-tella and Happy Dent were planted in P2.

Perfetti spends Rs 17 crore for advertising and marketing of the product to attract customers and to improve sales.

The company offered hefty sales-linked

incentives such as increase in margin in percentage terms with increase in sales and offered one pack free on every pack sold.

Question 2

The product allotment and commission strategy adopted by perfetti led to discontent among the channel members. Explain the company’s rationale in adopting such a distribution strategy.

Ans: 2:

Perfetti entered into the Indian market. During the entrance in the Indian market,

Perfetti did not merge or acquired any company.

It adapt the simple way that how much the goods wills be demand that much will be supplied.

The great change occur when it acquired the van melle

The acquisition brought a distribution network of 3 lakh.

Cont….

Instead of expanding the distribution network over a large of region, they focused on specific areas .

Company focused on small retailers . Small retailers unable to purchase large

quantity. The company felt to service twice in a week

to the outlets. Retailers were not willing to buy the same

brands twice a week. Some brands are perceived as substitute by

the retailers.

Cont….

To solve this problem and to keep flow of product in the market, the company had divided their product into groups.

P 1 group consists of Alpenliebe original, Chlormint, Big Babol. P2 group consisted of Centershock, Chlormint gum, Mentos, Marbles, Fruit-tella and Happy Dent.

The company had assigned the two groups to different distributors means one distributors can not had two groups together.

P1 got double sale than p2.

Cont….

Distribution costs were same for the both product.

The Company did not increase margins for distributors.

The company paid 5 percent margin to the distributors compared to the average industry figure of 10 percent.

Retailers were paid 15 percent when the industry standard was around 30 percent.

These are the basic reason for product allotment and adapting such strategies.